Markets turn risk-averse ahead of the Fed meeting

European Session

The results of the European Parliament elections surprised many, particularly with the significant showing of far-right parties in France and Germany. The far-right National Rally (RN) party in France won 32% of votes, prompting calls for snap elections and causing political uncertainty. This uncertainty reflected in the markets, with the French CAC40 plunging over 2% and the Euro trading under pressure, being the worst performing major currency.

The US Dollar / Gold

The USD edged higher and extended its rally following the upbeat May Nonfarm Payrolls data and European Union elections. Yet, gold recovered above $2,300 as markets turned risk-averse, with higher demand to safe havens amidst negative shifts in risk mood. This was particularly evident ahead of the highly anticipated Fed meeting.

Oil Market

Oil prices made a small gain, surpassing the key pivotal level of $75.27 and advancing to a fresh five-day high amid a wait-and-see mode among investors ahead of the US CPI and Fed decision.

US Session

The macroeconomic calendar for today doesn't feature any significant events that could sway global financial markets. However, attention is turning towards Wednesday, where crucial economic releases are anticipated before the Fed's decision. Also, keep in mind that Wednesday will see the release of US CPI inflation data, with expectations set at 3.4%. It's worth noting the recent drop in oil prices, so surprises in economic data shouldn't be ruled out.

The United States will unveil vital data on the Producer Price Index (PPI) inflation also during this year, offering valuable insights into inflation pressures at the producer level. Concurrently, the publication of weekly jobless claims data will provide updates on the health of the labor market.